BILL ANALYSIS Ó
SB 671
Page 1
Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 671
(Hill) - As Amended July 16, 2015
-----------------------------------------------------------------
|Policy |Business and Professions |Vote:|14 - 0 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Health | |18 - 0 |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill authorizes a pharmacist to substitute an alternative
biological product (biosimilar) when filling a prescription for
a prescribed biological product if a biosimilar is designated as
interchangeable with the reference product, among other
SB 671
Page 2
conditions, and communication is provided to the patient and
physician that a substitution was made.
It also requires the Board of Pharmacy (Board) to maintain a
link on its Website to the list of biological products
recognized as interchangeable by the federal Food and Drug
Administration (FDA).
FISCAL EFFECT:
1)Minor and absorbable additional costs to BOP (Pharmacy Fund).
2)Contingent on future federal Food and Drug Administration
(FDA) approval of biosimilars, biosimilar substitution could
result in significant future savings in state health programs
(primarily Medi-Cal, CalPERS, and correctional health). Like
generic versions of brand-name drugs, biosimilars are likely
to be lower in cost than brand-name biologics. Given that the
FDA's approval process has not been finalized and no
interchangeable biosimilars are available, it is difficult to
precisely estimate when and to what extent potential savings
from biosimilar substitutions will accrue. Actual savings
will depend on the biosimilar penetration rate and the cost
difference between biosimilars and reference products.
However, given plausible estimates of these variables, it is
reasonable to assume cost savings to the state could
eventually be in the tens of millions of dollars annually.
COMMENTS:
1)Purpose. This bill seeks to establish conditions under which
biosimilar substitution can take place. It appears a law
change is necessary to allow pharmacies to substitute
SB 671
Page 3
biosimilars deemed interchangeable with prescribed biologic
products. In addition, proponents believe the future
allowance of such substitution based on findings of
interchangeability warrants careful tracking and communication
to patients and prescribers about whether the prescription was
filled with the prescribed biologic or an interchangeable
biosimilar.
2)Biologics and Biosimilars. According to the FDA, biological
products (biologics) can include a wide range of products
including vaccines, blood and blood components, gene therapy,
tissues, and proteins. Federal law defines "biosimilar" as a
biological product that is highly similar to a U.S.-licensed
reference biological product notwithstanding minor differences
in clinically inactive components, and for which there are no
clinically meaningful differences between the biological
product and the reference product in terms of the safety,
purity, and potency of the product.
Unlike most prescription drugs, biologics are generally made
from living materials and have complex molecular structures.
Whereas generic versions of prescription drugs can be verified
as chemically "bioequivalent" to brand-name drugs, the complex
structure of biologics makes it more challenging to identify
generic versions. Additionally, until recently, FDA did not
have the authority to license biosimilars based on a
comparison to a reference product already approved as safe and
effective. Federal legislation in 2010 created an abbreviated
licensure pathway for biosimilars-much like the abbreviated
pathway for generic drug development. The FDA has begun to
issue guidance pursuant to this act, but regulations on naming
and interchangeability have not been issued.
3)Interchangeability. Federal law establishes a more rigorous
standard of "interchangeable biosimilar"-a drug that is both
biosimilar and can be expected to produce the same clinical
result as the reference product in any given patient, among
other safeguards. Federal law provides that, once approved,
SB 671
Page 4
an interchangeable biosimilar may be substituted for the
reference product without the intervention of the health care
provider who prescribed the reference product. Consistent
with federal law, this bill allows substitution only for
biosimilars deemed interchangeable.
4)Cost Savings. Reports cited by the Government Accountability
Office as part of a comprehensive review of the costs savings
attributable to generic drugs found that generic substitution
has saved the U.S. health care system more than $1 trillion in
the 12-year period 1999 through 2010. Various sources
estimate biosimilars will be priced at a 20% to 50% discount
from the price of reference products.
5)Support. Pharmaceutical companies and their trade groups
support this bill because it includes patient protections that
recognize the unique attributes of biosimilar products.
Patient advocacy groups support this bill because bringing
alternate biological products to market will reduce high
patient drug costs.
6)Opposition. Health plans and insurers oppose this bill. They
indicate it is premature to establish a state regulatory
regime for biosimilars at this time, given FDA has not yet
established the standards biosimilars need to meet for
interchangeability. They believe state lawmakers should
review FDA rules before deciding whether any restrictions are
necessary.
7)Previous Legislation. SB 598 (Hill) of 2013 was substantially
similar to this bill. The bill was vetoed by Governor Brown
who noted that "CalPERS and other large purchasers warn that
the [notification] requirement itself would cast doubt on the
safety and desirability of more cost-effective alternatives to
biologics. The FDA, which has jurisdiction for approving all
drugs, has not yet determined what standards will be required
SB 671
Page 5
for biosimilars to meet the higher threshold for
"interchangeability." This bill does not appear to address
the veto message, as the FDA still has not defined
interchangeability standards.
AB 1139 (Lowenthal), which was never heard, was similar to
this bill.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081